One issues not brought up here yet is the fact that the oil trade is all in dollars. So foreign countries must hold vast amounts of dollars to buy and sell oil among themselves. This money is held in foreign hands and stays out of the direct U.S. economy. To a great degree, "petrodollars" support the U.S. trade deficit because these are dollars that we can spend/send abroad that will never (?) be redeemed _by us._ It's like printing money and getting away with it. The U.S. and Saudi Arabia/OPEC made the deal to trade oil in dollars back in the '70s.
If the world oil trade changed to another trading currency -- the euro, for example -- the oil traders of the world would unload their stocks of dollar inflict a major hit on our currency. Interest rates would rise and we would have to "pay as we go" for everything, like most other countries, because other countries wouldn't be accumulating our money for trade among themselves.
Interestingly, two oil-producing countries switched from dollars to euros for their oil exports: Iraq (two years before the invasion) -- and Iran. We have attacked one, and may well attack the other. Both are members of Bush's Axis of Evil. Many conspiracy theorists see a link. Apparently Venezuela also dropped the dollar for its oil exports in favor of a barter system with neighboring countries, and the gov't is very "concerned" about what's going on down there, though I truly doubt we'll invade.
|